Every company must take proactive steps when it comes to reducing employee theft. My husband works for a privately owned business where the company president has taken the time to hire top notch sales people.

One day, my husband noticed an account that wasn’t producing sales, but had been given the best pricing discount. While he questioned this, the sales VP consistently waved it off. After looking into the account further, he found out what was going on. The VP and another executive had set up the account to source product for their own resale in the gray market. The company quickly went into a downward spiral.

Financial resources were directed to prosecuting these two executives and every employee felt the impact. New product development slowed which gave the company’s competition an advantage. As marketing efforts were scaled back, sales couldn’t deliver on their projections. The sales pipeline shrunk, manufacturing dropped below capacity, profit sharing plummeted and employees were laid off.

Today, the company has recovered, but it was a slow process. The executives were prosecuted and the company was lucky. They learned an important lesson about employee theft the hard way.

How is your business? What steps are you taking to avoid employee theft?

The Real Consequence of Employee Theft

The Association of Certified Fraud Examiners has reported a typical business will lose 6% of revenues from employee theft. The report mentions that small businesses are especially vulnerable since they don’t have the resources in place for theft detection and avoidance. It is estimated that 1/3 of business bankruptcies could be avoided if companies had better theft prevention practices.

You work hard for every dollar in today’s economy. Each dollar needs to stretch further than ever before. Take some proactive steps today to help reduce employee theft. Here are a few ideas:

1. Screen potential workers to see if there is past history of criminal activity. You can also check credit histories and other information that may not surface through a normal employment check.

2. Have a good system in place for bookkeeping. Don’t let the same person that processes checks also process receipts.

3. Review bank statements each month prior to passing them to the bookkeeper.

4. Have a strict policy for expense reports and be sure to audit them prior to payment.

5. Conduct physical inventories and reconcile this inventory to company sales.

6. Control check & document signers by limiting the number of signatories to a limited number of trusted employees.

7. Keep tight control on petty cash. Develop a system that requires a receipt and signed vouchers for all petty cash distribution.

Theft Prevention Equipment

Another step in reducing employee theft is to invest in security and fraud resistant products. A simple locking cash drawer is perfect for small businesses. Be sure to purchase a drawer with an internal locking safe so that large denomination bills and documents are secured from pilfering hands. In many cases, a locking cash drawer can pay for itself with one theft avoidance.

Tamper-evident plastic bags can protect your assets by ensuring what is placed in the bag actually makes it to the bank for deposit. These plastic security bags have come a long way and now include tamper indicators for cold, heat, saliva, and other vulnerable points. Tamper-evident bags help keep honest employees honest.

See-through employee bags are a great investment. The clear vinyl construction allows for easy identification of bag contents, which can also be picked up by a security camera. Clear employee bags are popular within retail stores, casinos, hotels, and schools.

Low cost hidden cameras can be placed throughout your business to keep a watchful eye on employee activities. Everyday items like Kleenex boxes and clocks merely disguise the camera, but help you determine which employees you can trust…and how much.

Don’t wait for theft to occur. Start planning a comprehensive employee theft prevention program for your business today.

Author Bio: Trish Goldfarb is a Product Manager at Block and Company Money & Security Solutions. Block and Company provides money and security products to banks, credit unions, vending companies, retail stores, restaurants, and casinos. For more information on this topic, please visit Employee Theft Prevention.

Category: Business Management
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